REP Wrap: ISSB to focus on nature and human capital, Enel pays for missed SLB goals
Your weekly summary of corporate sustainability news.
The International Sustainability Standards Board (ISSB) has confirmed that its next focus areas will be nature and human capital. The body, which is developing the world’s flagship corporate disclosure rules, said it would kick off research projects on the two topics, to identify what information investors would need to assess relevant risks and opportunities. It said it would work closely with existing leaders in the space, including the Taskforce on Nature-related Financial Disclosures. “Informed by market feedback, the ISSB decided not to embark on projects related to risks and opportunities associated with human rights – beyond risks and opportunities relating to a company’s own workforce and workers in its value chain – or integration in reporting at this time,” it added.
Enel will have to fork out an estimated €90m in additional interest payments after missing the targets in its Sustainability Links Bonds. The Italian energy company is the world’s largest issuer of SLBs, but has fallen short of its commitments around energy intensity – in part because high gas prices after the invasion of Ukraine meant Italy used more coal than anticipated. This week, it was confirmed that a step-up had been triggered on €11bn of the firm’s labelled debt as a result. Bloomberg estimated that the full cost of the additional coupon payments would be around €90m.
Chief Financial Officers increasingly view ESG issues as strategic, rather than simply a response to regulatory requirements, according to a survey by BDO. The accounting and advisory firm polled 600 CFOs from across a range sectors and found that many had shifted their focus over the past year to building ESG programmes that improve risk management, competitive advantage and strategic resilience. Attracting and retaining talent was cited as another reason to prioritise ESG, especially in sectors like healthcare, where there is a particularly high shortage of workers.
Two major companies have pulled back from some of their environmental or social commitments. Last week, Unilever confirmed its decision to scale down its commitments on plastic, pay and diversity to focus on carbon. Alphabet, the parent of Google, has said it will scrap a requirement for its US suppliers and agencies to pay their staff at least $15 an hour and provide healthcare.
The European Commission launched the European Energy Efficiency Financing Coalition to convene the region’s banks and policymakers in a bid to improve access to capital for energy efficiency measures.
A paper published in the journal Science yesterday argues that voluntary corporate climate targets are calculated incorrectly. Academics argue that the practice of splitting the remaining carbon budget by the number of companies in the current ecosystem, in order to establish a suitable climate target, creates difficulties for emerging companies. It also assumes that incumbent businesses will exist in a net-zero future. The authors urge governments to step in with regulatory obligations to fix the issue, and to ensure that the need for innovative start-ups is baked into the way the carbon budget is allocated.
